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Inside the blockchain developer’s mind: What is a testnet?

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Cointelegraph is following the development of an entirely new blockchain from inception to mainnet and beyond through its series, Inside the Blockchain Developer’s Mind. In previous parts, Andrew Levine of Koinos Group discussed some of the challenges the team has faced since identifying the key issues they intend to solve and outlined three of the “crises” that are holding back blockchain adoption: upgradeability, scalability, and governance.

Blockchain testnets are an interesting subject because they come in all shapes and sizes. So, in this post, my goal is to leverage my inside experience as the CEO of Koinos Group (developers of Koinos) to demystify testnets and perhaps give some insight into why they seem to have such an impact on price.

The most obvious place to start is with the name: testnet. The purpose of a testnet is to test a network. At a very high level, there are two “flavors” of testnet. The first is a testnet that is released prior to a mainnet (main network), and the second is a testnet that is released after a mainnet is already in operation. The functions these serve are similar, but the context in which they are released dramatically impacts the perception, and impact, of the release.

I’ll start with the second kind of testnet because, in a way, this is the more straightforward context. When you’re talking about existing networks like Bitcoin and Ethereum, testnets serve two primary functions. The first is that they are a live environment in which developers can test their decentralized applications. Every good developer knows that there’s no such thing as perfect code, so testnets give developers an environment that is very similar to the “main chain” (e.g. Ethereum) in which they can test their code with effectively zero risk. Things running on a testnet are expected to break, and the tokens used are expected to be worthless.

Related: London fork enters testnet on Ethereum as difficulty bomb sees delay

So, testnets are an environment that enables decentralized application (DApp) developers to increase the value of their applications (i.e., make their apps better) precisely because there is no expectation of full functionality or wealth creation. In a sense, the value of a testnet stems from its worthlessness.

DApp developers vs. blockchain developers

But testnets have a two-sided nature, which brings us to the second function that testnets serve, and that function is to the benefit of, not the DApp developer, but the platform developer (in our case, the blockchain developer). One thing I have been surprised to see from my unique perspective is how commonly DApp developers are conflated with blockchain developers. Typically, people who write smart contracts are not blockchain developers, and blockchain developers generally spend very little time writing smart contracts.

Ironically, Koinos is throwing a huge wrench in this distinction because its entire system is implemented as smart contracts! Since Koinos smart contracts are upgradeable, this means that any feature can be added to the blockchain without a hard fork, but it also means that the people developing the blockchain (like members of the Koinos Group) are using and developing the very same toolchain and toolkit that developers will use to build their DApps. But this is a feature that is totally unique to Koinos, so we can put that aside for the sake of this discussion.

In every other blockchain, the blockchain developers have to develop updates in whatever programming language the blockchain is written in (C++, Rust, Haskell, etc.), and they are working on a very large and complicated system called a “monolithic architecture.” Within monolithic architectures, changing any part of the system can impact any other part of the system, so the risk of making changes is that much higher.

Blockchain developers also need a live environment with low stakes that they can use to test out their changes and see what breaks. Like application developers, they want this environment to be as close to the real network as possible, which means that they want their code to interact with code that application developers will be running as well.

Two sides of testnets

This reveals the two-sided aspect of testnets. They enable both the developers of applications and the developers of platforms to interact with one another and safely test their code in as close to a live environment as possible, but with very low stakes. This enables both groups to improve their products and make them more valuable to their users.

Now we can start to see why testnets seem to have such an impact on token price. If we assume that price is a function of value, and that testnets help developers increase the value of their products, then price impact should be expected. The problem is that this correlation has led to several undesirable outcomes. Projects will often release a “testnet” that has no utility to developers for the sole purpose of boosting their token price. Unfortunately, many people will see the testnet announcement and just assume that something valuable has been released, and so the act will have the desired effect on the price.

Testnets before mainnet

Up until now, I’ve been focusing on the utility of testnets in the context of existing blockchains, which is that they create a safe space for application developers to test their applications and for blockchain developers to test upgrades to the underlying platform. This will help you understand the other important context in which testnets are released, which is prior to the release of the mainnet.

Once again, testing is the primary objective, but the focus is far more on the system itself, as it has never before been operational. Of course, since it is new, there won’t be any applications running on it anyway. Now the situation is more one-sided. The majority of the people working with the codebase will be blockchain developers, and the goal is to get the platform to a place where developers want to actually build on it.

The first requirement developers will have is that the platform is proven to be sufficiently safe, and that should be the prime directive behind the specific tests that are run. Assuming developers are convinced that the platform is sufficiently safe, then they’ll need to be educated on how to use the platform. In other words, the testnet must be thought of as an educational tool that enables developers to gain a deeper understanding of how they will be able to use the platform while they are also helping to test the security of the network.

Finally, as they are testing the network and learning how to use it, they will inevitably find places where the platform could be improved — important libraries might be needed, or important documentation might be needed to help them understand the system. This information is invaluable feedback that the platform developers absolutely have to use to make the platform better before mainnet implementations are finalized.

Computer networks have become a major part of our lives whether we realize it or not, and they are only increasing in importance. Testnets are a critical step in the process of releasing new and innovative computer networks that can add ever-increasing value to our lives. Hopefully, by gaining a deeper understanding of the nuances of testnets and the important contexts in which they are released, you are now better equipped to evaluate specific testnet releases and whether they are being designed and launched for the right reasons.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Andrew Levine is the CEO of Koinos Group, where he and the former development team behind the Steem blockchain build blockchain-based solutions that empower people to take ownership and control over their digital selves. Their foundational product is Koinos, a high-performance blockchain built on an entirely new framework architected to give developers the features they need in order to deliver the user experiences necessary to spread blockchain adoption to the masses.

Koinos Group recently released version 2 of their testnet, which features stability improvements, their mana fee-less transactions system and a contract development toolkit that will allow developers to build and run smart contracts on Koinos.

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Blockchain and Artificial Intelligence

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Artificial intelligence (AI) was introduced in 1955 by John McCarthy

Artificial intelligence (AI) is the ability of a computer program to think, learn and mimic human thought. Introduced in 1955 by John McCarthy, artificial intelligence has several different fields of study. These fields include computer science, mathematics, psychology, and philosophy, among many others. AI is linked to several different use cases. The most prominent use cases include machine learning, supply chain optimization, speech recognition, self-driving cars, and manufacturing optimization.

Now we know a bit about AI, let’s review a few examples of how AI is improving decentralized networks like blockchain.

Cryptocurrency Trading

During the past few years, artificial intelligence has substantially increased its presence in the area of crypto trading. This is particularly true with high-frequency trading (HFT). Essentially, HFT is a type of algorithmic financial trading characterized by high speeds and high turnover rates. High-frequency trading is a perfect vehicle for cryptocurrency trading because the crypto universe has several different exchanges.

HFT uses artificial intelligence to analyze multiple technical indicators across various exchanges in an effort to take advantage of market opportunities. AI is still in its infancy stage in regard to crypto trading. Going forward, artificial intelligence will play a pivotal role within the crypto trading community. These are commonly known as trading bots.

Suggested Read: What Are Public, Private, and Consortium Blockchains? – Cryptobite

Blockchain Security

Unfortunately, industries that find themselves in a hyper-growth phase are more susceptible to cyberattacks and malware. Without question, blockchain technology, along with digital assets, is currently experiencing an explosive rate of growth. Consequently, the blockchain industry has endured an exponential increase in malware, phishing, fraud, and digital theft. Based on data provided by industry experts, $9 million is lost to cryptocurrency scams on a daily basis.

The key to successfully thwarting a blockchain hack is to identify the threat and understand the nature of the attack as quickly as possible. Hackers are acutely aware that they must strike quickly in order to launch a profitable attack. Unfortunately, crypto exchanges have a poor track record in preventing cyber-attacks. AI-based cybersecurity systems are designed to detect a hack in real-time and dramatically increase the likelihood of stopping the attack. AI systems are far superior to traditional cybersecurity systems because AI has the ability to detect patterns from previous attacks. This information can be used to prevent future cyber threats.

Bitcoin Mining

As you know, all crypto transactions are verified and added to the blockchain by Bitcoin miners to maintain the integrity of the network. In exchange for their work, miners are rewarded with Bitcoin. Crypto mining requires energy consumption and computing power. Over the past few years, Bitcoin miners have explored the idea of using artificial intelligence to reduce energy waste and computing power to reduce costs.

A few of the largest mining companies have created AI-based systems, allowing companies to share power and increase profitability. AI algorithms have made crypto mining faster, more profitable, and more efficient. Without question, artificial intelligence will continue to play an essential role throughout the crypto industry.

Brief Summary of Blockchain and Artificial Intelligence

Artificial intelligence (AI) was introduced in 1955 by John McCarthy

  • AI is the ability of a computer program to think, learn and mimic human thought.
  • AI encompasses several different fields of study.
  • AI has increased its presence in cryptocurrency trading.
  • High-frequency trading uses AI to analyze technical indicators across many exchanges.
  • AI-based cybersecurity systems are designed to detect a hack in real-time.
  • Bitcoin miners use AI to reduce energy consumption and computing power.
  • A few of the largest mining companies have created AI-based ecosystems.
  • AI algorithms have made crypto mining faster, more profitable, and more efficient.
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Blockchain

How Does Blockchain Compare to Other Innovations?

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How Does Blockchain Compare to Other Innovations

Probably, the most innovative discoveries of the past 100 years are the world wide web (i.e., internet) and the mobile phone. By now, both these things have become a must-have of modern human beings. Let’s look at the stats. In 1995, only 17% of USA residents were using mobile phones. By 2018, only 5% of US residents still did not have this device in use. While in 1995, only 16 million people (0,4% of the world’s population) were internet users, by 2018, this number increased to 4.2 billion, which is more than half of all people. Interestingly, during the first 5 years of the internet’s existence, only 5% of all people have found it worthy enough to use.

These numbers indicate how we interact with new technologies. As a general rule, most people are skeptical of discoveries and innovations at the early stages of their existence. Still, when the benefits of using a certain technology become obvious, it spreads all over the world with the speed of light.

Typically, it takes about 10 years before the average consumer makes an effort to research a new product or service. By this time, approximately 10% to 20% of the overall population had adopted the innovation. The remaining 80% to 90% of the population is still on the sidelines, unwilling to implement this new technology into their daily lives. Within 20 years of the new product’s existence, the majority of the population finally adopted it. Without question, consumers are very slow to implement new technologies.

Suggested Read: Blockchain and the Banking Industry – Cryptobite

Adoption of Blockchain Technology

But should we wait another 20 years to see the adoption of blockchain technology? Most likely, it will occur much faster than the internet, mobile phones, automobiles, or air travel. Why? Because once the blockchain infrastructure is in place, the old ledger system becomes useless. Therefore, soon, consumers will not have to choose between the new digital ledger and the old manual ledger. Companies that won’t migrate to the blockchain will be left behind and eventually forced out of business.

Within the next decade, blockchain technology will permeate our daily lives. For example, everyday things like voting, purchasing a vehicle or a home, visiting a medical care provider, investing in the stock market, obtaining a bank loan, going to college, or shopping at a retail establishment, will encounter blockchain technology.

Most probably, within the next five to 10 years, we will encounter blockchain technology daily. This explains why it will be exponentially larger than the internet.

Brief Summary of Blockchain In Comparison to Other Innovations

  • As a general rule, people are skeptical of discoveries and innovations.
  • It takes approximately 10 years for the average consumer to become a regular user of innovations.
  • Full adoption of a new product or service takes 20 to 30 years.
  • The adoption rate of blockchain will occur much faster.
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What Is Blockchain Consensus Algorithm?  

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What Is Blockchain Consensus Algorithm

Blockchain technology has many different moving parts. Hence, to operate smoothly, the architecture must be properly designed. An important piece of Nakamoto’s architectural design is the use of a consensus algorithm. 

Blockchain Consensus Algorithm in a Nutshell

In its simplest format, a blockchain consensus algorithm is a decision-making process. It is designed to assist in reaching a common decision by a group of people. Of course, in this particular scenario, the consensus algorithm involves blockchain-related solutions.

How Does it Work?

Let’s assume that 20 co-workers are asked to collaborate and offer a recommendation on a specific project. Each participant in the group will reach a decision that will provide the greatest individual benefit. The group must listen to each recommendation and decide which of them will provide the greatest overall benefit. The final recommendation must be accepted by all group members regardless of whether it offers the best solution for each individual.

Let’s assume that 20 co-workers are asked to collaborate and offer a recommendation on a specific project. Each participant in the group will reach a decision that will provide the greatest individual benefit. The group must listen to each recommendation and decide which of them will provide the greatest overall benefit. The final recommendation must be accepted by all group members regardless of whether it offers the best solution for each individual.

Suggested Read: Luxury Fashion Brands Are Entering The Crypto Space (cryptobite.io)

Brief Summary of Blockchain Consensus Algorithm

  • An important piece of blockchain architecture is the use of a consensus algorithm.
  • It is a decision-making process that helps a group of people to make a common decision.
  • The consensus algorithm always produces the optimum solution for the overall group.
  • A consensus algorithm helps to create fairness and equality in a decentralized ecosystem.
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